Thursday, February 04, 2016 8:55 AM / FBNQuest Research
The executive chairman of the FIRS, Babatunde Fowler, said on Tuesday that the service aimed to raise N4.96trn (US$24.9bn) this year, including N2.00trn from VAT and N1.87trn from companies’ income tax (CIT).
In a rallying call at the service’s annual retreat, his message was that it had to meet its targets since the FGN was depending heavily upon non-oil revenue collection to fund its expansionary budget proposals for 2016.
A repeat of 2015, when FIRS collections of N3.73trn fell well short of the target of N4.57trn, was not acceptable, the chairman signalled. (The balance of the target for this year would consist largely of petroleum profits tax.)
The service is to deploy a stick-and-carrot approach to achieve its targets. The chairman told the retreat that it had identified an additional 360,000 payers of CIT in the three previous months, and that the figure would reach 500,000 by the end of Q1 2016.
There is no suggestion of higher tax rates, and advisors to the president last year ruled out such for direct taxes.
We think therefore that the projected 33% increase in FIRS collections in 2016 is highly ambitious.
We suspect that the FGN recognizes the scale of the challenge, which may explain its conversations with multilateral agencies on budget support (Good Morning Nigeria, 02 February 2016).
We note that the chairman’s targets for 2016 are higher than those in the expenditure framework (N1.48trn for VAT and N1.53trn for CIT).